Hacker Magnet or Sophisticated Tool? Obamacare’s Database Debated

By Charles S. Clark

July 17, 2013

The centralized data hub that will link agency records on people who sign up for Obamacare is either solidly on schedule and impenetrable to hackers, or it is floundering and in danger of swelling into “the biggest data system of personal information in the history of the U.S.”

Both views were displayed Wednesday at a joint subcommittee hearing of the House Oversight and Government Reform Committee that roped in issues from cybersecurity to government mismanagement to the fate of the Affordable Care Act to the scandal over political targeting of taxpayer groups by parts of the Internal Revenue Service.

Taken together, representatives from the Health and Human Services Department, the IRS and auditing agencies appeared confident that the Obama administration can meet the health care law’s Oct. 1 deadline for opening state insurance exchanges with sufficient safeguards on personal information to protect Americans’ privacy.

The Federal Data Services Hub, a $394 million contractor operation run by the Centers for Medicare and Medicaid Services in Columbia, Md., is a tool that will allow citizens applying for the new health insurance plans to enter their income and personal identification online and get a determination of eligibility for tax credits, in many cases within seconds. The hub is designed to link databases at HHS and IRS with the Homeland Security and Veterans Affairs departments, the Social Security Administration, the Office of Personnel Management and the Peace Corps.

Hearing chairman Rep. James Lankford, R-Okla., warned that the “potential for fraud and violations of privacy are multiplied by this Rube Goldberg construction.” He cited a June Government Accountability Office report showing that only 20 percent of the privacy controls and other preparations are complete. ”The government will waste billions of dollars in subsidizing taxpayers who are not eligible,” Lankford said, and proceeded to blast the IRS as being “highly politicized under this administration” citing 100 visits to the White House by previous Commissioner Doug Shulman.

But the “GAO ultimately concluded that the implementation was workable and on track,” countered Rep. Jackie Speier, D-Calif. “No major program has launched without a few hiccups,” she said, adding that CMS has contingency safeguards and “long experience with complicated health systems.” Speier praised the “dedicated federal and state government employees who are implanting the law of the land” and said she wanted to “debunk the notion that to expand health care we have to sacrifice privacy.”

Speier did, however, express worry that the “federal data hub has a bull’s eye on it, and the potential for being hacked is great.”

CMS Administrator Marilyn Tavenner said her agency is “hard at work designing and testing a secure system, and I can assure you that by Oct. 1, the health insurance markets will be open for business. I can also assure all Americans that the information they supply will be protected to the highest standards.”

Tavenner sought to dispel “confusion,” declaring that no one implementing Obamacare will ask exchange applicants for their personal health information, and that no such information will be stored on the hub. “The hub is not a database that stores, it is a routing tool to put government databases on the same system” while eliminating the need for multiple agencies to design their own, she said. CMS has designed similar systems with privacy protections in implementing the Medicare Advantage program and state Medicaid programs.

Acting IRS Commission Danny Werfel said the tax agency’s design and testing of systems to share information on income eligibility for premium assistance tax credits “is on target to be ready by Oct. 1.” He cited interagency agreements on computer matching, training and the fact that IRS had decades of experience enforcing privacy guarantees under Section 6103 of the tax code. “We have a robust set of requirements that have been battle-tested over the years,” he added, promising strong monitoring and oversight.

Henry Chao, CMS’ deputy chief information officer, cited progress since the GAO report based on April data was prepared. He assured a skeptical Lankford that his team has been testing with states in waves since February and that the amount of time an applicant’s personal information would be stored or “cached” in the hub would be measured in minutes. The information, he said, includes names of people in a household, addresses, email addresses, phone number, Social Security numbers , race and ethnicity, veteran status and, where applicable, pregnancy status, but no information on disabilities. Protections against hacking are being tested by professional experts, he added.

John Dicken, director of health care at GAO, cautioned that the Oct. 1 deadline wasn’t assured., “Much progress had been made, but much remains to be done” in testing the hubs, he said.

Left unsatisfied was Rep. Pat Meehan, R-Pa., who warned that what might be the “biggest data system of personal information in the history of the U.S.” does not appear to have been vetted by the top specialists at the FBI and DHS or at private banks. “Are you ready? Who has access? Are they competent?” he asked the CMS witnesses, raising the specter of cyber theft of intellectual property from U.S. “innovators.” “The personal information of 20 million Americans is just as important” as trade secrets, he said, and “every sector says they are only as strong as their weakest link.” This hub “is an overwhelming task that at best carries an unacceptable price tag.”

Rep. Darrell Issa, R-Calif., the committee chairman, criticized CMS for hiring Serco, a British-owned company, to help set up the exchanges, noting that the company recently was faulted for allowing exposure of thousands of internal Thrift Savings Plan records. “Where are the pilots for a company with no internal controls?” he asked.

Tavenner said Serco is a “highly skilled company with a proven track record, and won the contract in full and open competition.”

In a related drama, Rep. Jim Jordan, R-Ohio, castigated Werfel, who has been on the job for a month and a half, for substituting himself as a witness when the committee had invited Sarah Hall Ingram, who plays a coordinating role in implementing the health care law but who also helped preside over the tax-exempt division unit in Cincinnati responsible for the controversial singling out of mainly tea-party groups.

“Who is the project manager for the ACA?” asked Jordan. Hall is “in D.C. just a few blocks from here,” he noted, brandishing a document showing that Hall recently briefed an IRS oversight board on the technical implementation of the federal data hub.

Werfel disagreed with the characterizations. “At IRS we balance out a lot of factors, two of which are accountability and technical expertise,” he said. “We received an invitation to the hearing, so I suggested a combination of me and the chief technology officer. There are multiple people in the IRS with the expertise.”

Rep. Michelle Lujan Grisham, D-N.M., asked Werfel if he was concerned about the proposed 24 percent budget cut for IRS being considered Wednesday by the Appropriations Committee. “It’s extremely challenging generally, and all mission-critical activities will be severely impacted, from collecting revenue, to helping taxpayers navigate the code, to enforcement, to going after bad actors, to legislative mandates such as offshore tax evasion,” he said. Such cuts would be “extremely relevant across IRS and extremely relevant across the Affordable Care Act. The tax code doesn’t go away” with a budget cut, he said, noting cutbacks in customer service that are already underway. “In the end, it affects the taxpayer.”